Z-Score (Altman)

A quantitative formula developed by NYU professor Edward Altman in 1968 that combines five financial ratios to predict the probability of a company going bankrupt within two years. A Z-Score below 1.8 indicates high bankruptcy risk, while a score above 3.0 suggests the company is in the safe zone. The model proved remarkably durable -- more than fifty years later, it remains widely used by credit analysts, distressed debt investors, and risk managers to screen for financial distress.